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Credo Technology is surging after the data center interconnection supplier guided fiscal Q3 (Jan) and Q4 (Apr) revenue well above analyst expectations last night. The upside reflects strong demand for its Active Electrical Cables, continued momentum in its IC business, and growing enthusiasm around multiple new long-term growth opportunities tied to AI-driven data center expansion.

• Credo guided Q3 and Q4 revenue well above Street expectations, pointing to improving demand visibility.
• The company previously said that AECs remain its fastest-growing segment, with customer forecasts strengthening across the board in recent months. AECs have become the de facto standard for intra-rack connectivity and are displacing optical rack-to-rack links up to 7 meters.
• The IC business, including retimers and optical DSPs, continues to show strong growth alongside AECs. CRDO expects significant optical DSP growth in FY26, driven by 50 gig and 100 gig per lane deployments, with longer-term upside from 200 gig per lane products. The company's existing AEC and IC businesses each address multibillion-dollar market opportunities with solid visibility.
• Credo has added three new growth pillars, each representing a distinct multibillion-dollar opportunity:
  • ZeroFlap Optics, a laser-based optical connectivity platform, is in live data center trials, with sampling at a second U.S. hyperscaler expected later this fiscal year and initial revenue anticipated in FY27.
  • Additional growth pillars include a microLED-focused collaboration with Hyperlume and the OmniConnect gearbox platform for optimized XPU connectivity.

Briefing.com Analyst Insight:

Credo's guidance highlights its increasing relevance in the AI data center ecosystem, where reliable, high-speed connectivity is critical even for companies not directly supplying AI servers. The rapid adoption of AECs is driving near-term results, while expanding IC offerings and emerging technologies such as ZeroFlap Optics, microLED connectivity, and OmniConnect gearboxes provide longer-term optionality. With multiple multibillion-dollar markets in play and improving visibility, Credo is evolving from a niche interconnect supplier into a broader AI infrastructure enabler. Credo is not one of the first names investors think about as a play on the buildout of AI infrastructure at data centers. However, it is clearly benefitting.